How does a SPAC differ from an IPO?

In an IPO a real company lists with a prospectus and full regulatory scrutiny; in a SPAC an empty shell lists first and the real company enters later via merger, with less scrutiny and more dilution for retail investors.

What happens if the SPAC finds no company to buy?

It liquidates at the deadline and returns the trust money to shareholders (around the offer price, roughly $10 per share plus interest).

Does a SPAC belong in a dividend portfolio?

No: they are speculative vehicles on young, unprofitable businesses — the opposite of a company with a history of growing dividends. Understanding them helps you avoid them, not buy them.

SPAC | Wiki Por Dividendos

A SPAC (Special Purpose Acquisition Company) is a company with no operations — a "blank check" — that lists on the stock market with the sole purpose of raising money and later merging with a private company, taking it public through the fast lane. For the acquired company it is a shortcut versus a traditional IPO; for retail investors, a vehicle with a statistically poor record.

How it works

The shell lists: the SPAC raises money (typically at $10 per share) and deposits it in a trust account.
The search: the sponsors have a deadline, usually 18 to 24 months, to find a company to merge with.
Merger or refund: if the merger is approved, the private company starts trading under the SPAC's ticker; if there is no deal in time, the SPAC liquidates and returns the trust money.

Where the catch is

The structure loads the dice against retail shareholders:

The sponsor's "promote": sponsors receive around for a symbolic price — diluting everyone else from day one.

SPAC

How it works

Where the catch is

SPACs and dividends

Frequently asked questions